Wednesday, June 3, 2015

Dharmapuri MP Dr Anbumani shows the way - Organises Education Loan Awareness programme for bankers and students

Education Loan Awareness Programme at Dharmapuri on 1st June 2015
Dr Anbumani Ramadoss MP (third from left), Prime Point Srinivasan (fourth from left)
Dr Anbumani Ramadoss (Former Union Health Minister and sitting MP of Dharmapuri, Tamil Nadu) organised an unique event on 1st June 2015 at Dharmapuri to create awareness about education loan among the students and parents. He had also invited all the local Bank Managers. 

Probably this is the first time, a sitting MP is organising such awareness programme anywhere in India for the benefit of people in his constituency. They made a wide publicity through media, banners and pamphlets.  More than 300 students and parents participated in this event.

Prime Point Srinivasan, Convenor of Education Loan Task Force (ELTF) was the Chief Guest and he delivered a talk on various aspects of Education Loan guidelines.  This event helped to ease the tension between the bankers and the public and to understand each others difficulties.   

Two important things observed was that though Reserve Bank of India and Indian Bank Head Office specifically advised all the banks not to follow 'service area concept' for education loans, Lead District Manager of Indian Bank openly admitted in the meeting that they were following service area concept for their convenience.  However, ELTF has taken up the issue with Indian Bank Head Office.

Secondly, the local State Bank of India has not been granting any education loans presently citing bad debts.  This matter is also being taken up by ELTF with State Bank of India Chairman.

While addressing the gathering, Srinivasan explained the application procedures, eligibility of interest subsidy, grievance redressal mechanism, etc.  
While summing up the views, Dr Anbumani MP said that this programme was more a sensitization programme for both bankers and the students.  He also assuired to take up with Finance Minister the mess up of interest subsidy matter.

This event was an unique event which can be emulated by other MPs and MLAs in their constituencies.  Another important matter which needs 'three cheers' is the total neutrality of the programme.  Though Dr Anbumani is the leader of a big political party, his team ensured that no political colour was given to the event.  

Some of the photos:

Tuesday, April 7, 2015

Indian Overseas Bank confirms that Govt. of India settled only 44% of the interest subsidy claim for Education Loan in 2013-14

Time and again, Education Loan Task Force (ELTF) has been blaming the Government of India for not settling 100% of the eligible interest subsidy during the moratorium period.  ELTF has taken up this issue through our supporting MPs in the Parliament.

Now in response to a letter of Shri Vinoth Kumar, a student borrower of Indian Overseas Bank, B. Mettur Branch, the Bank's Head Office has confirmed that only 44% of the claim was settled by the Government for the year 2013-14.  

As per rules, the Government of India should settle 100% of the interest during the moratorium period.  In many cases, the students get only a small portion.  The banks force the students to pay the balance interest and treat them as NPA.  

The eligible students can now individually approach their branch manager and request them in writing (1) the amount of interest debited in the loan account during the moratorium period and (2) the amount of interest subsidy credited to the loan account. Alternatively, you can collect the statement from the Bank and work out the details yourself. If the students need any clarification, they can approaqch the bank manager.  If the Managers do not clarify, the students can meet the Regional Manager and give a written complaint.  

Students should note that there are two interest subsidy schemes. (1) for loans granted on or after 1st April 2009 - it is a continuous scheme. Due date for submission of claims by banks is over for the period up to 2013-14.   (2) For the loans granted prior to 1.4.2009 and outstanding as on 31.12.2013.  This is one time scheme and now the due date is over for submission of claim.  For more details, please see the guidelines in this site. 

 If there is a difference, the students can also ask the Bank Manager the details of the claim submitted by them on behalf of the concerned loan account.  If there is any discrepancy in the interest subsidy received or claimed, the students can send a written complaint to the Chairman of the Bank.

Please do not post any comment for this posting.  If you need to convey anything, please send a us your mail to

Tuesday, March 24, 2015

7 reasons why NPAs are mounting in education loan - Insensitivity of banks pushes the students into debt trap

Based on the complaints received from various students, ELTF finds that the banks do not classify NPA properly and unnecessarily blame the students. We have found out 7 important  reasons for inflated NPA by banks. 

1.  Inhuman attitude of the bank officials.  Not understanding the financial status or earning capacity of the student.  Though IBA stipulates 10 to 15 years of flexible and telescopic repayment (lower EMI at the beginning and gradual increase of EMI in the later years), most of the branch managers fix huge EMI for 5 years.  This burdens the students.  EMI is fixed more than the income of the student. 

2.  Reluctance of bank managers and regional managers to re schedule the EMI, even in genuine cases.

3.  Wrong classification of education loans.  If the education loans are properly classified, nearly 75% of the present NPA will become good assets.  Banks purposely show increased NPA to avoid education loans.  They prefer huge corporate loans, even if they become NPA,  for 'obvious' reasons.  

4.  Right from the day 1 of a student entering the bank premises seeking education loan, he is being harassed and asked to run pillar to post.  The students get frustrated and develop enmity with the bank.  Managers do not create awareness of the bank rules among the students.  In many cases, we found managers themselves do not have good knowledge. 

5.  Lack of good relationship between the branch officials and the borrowing students.  That is why we always suggest that a get together of all the borrowing students once in a year to be conducted by the branches or regions, so that the students develop loyalty.  Unfortunately, no bank is willing to accept our suggestion.

6.  Lack of proper interest subsidy management by the branches.  Though 100% subsidy is available for students, the branches do not claim the correct subsidy in time.  Even the subsidy element is taken into account as NPA.   Unpaid subsidy is the default of the Government. For example, a person who avails a loan of Rs.1,00,000/- at an interest rate of 12% pa, disbursable for 4 years @ Rs.25,000/- per annum is eligible for an interest subsidy of Rs.42,000/- from the Government, if he is eligible.  Unfortunately, in most of the cases, the student gets only around 20%.  If he gets a subsidy of Rs.10,000/-, the bank forces the student to pay the balance amount of interest Rs.32,000/- (amount not paid by the Government).  When the student commits 3 months default, the bank classifies the entire loan as NPA, which includes the sum of Rs.32,000/- not paid by the Government.  It is the NPA of the Government technically and not that of the student.   How the student can be blamed?

7.  Individual banks and Indian Banks Association do not take interest in creating awareness about education loan, interest subsidy, repayment etc.  Even recently, when Ministry of HRD extended the interest subsidy due date for SC/ST students, neither the banks or IBA took any initiative to pubclicise the extension date.  ELTF issued press note and publicised throughout India for the benefit of SC/ST students.  The insensitivity of the Banks and the Indian Banks Association in implementing the Education Loan Scheme is the main reason for all the problems faced by the students.

-  By K. Srinivasan, Convenor, Education Loan Task Force

Friday, December 19, 2014

Independent expert committee to investigate education loan and interest subsidy scheme demanded in Lok Sabha

At the request of ELTF, Shri S R Vijayakumar, MP of Chennai Central took up the Education loan interest subsidy issue during 'Zero hour' in the Lok Sabha on 18th Dec 2014.  He demanded an independent expert committee to be set up to investigate into the administration of education loan and interest subsidy scheme.

The text of his speech as published in the Lok Sabha site:

SHRI S.R. VIJAYA KUMAR (CHENNAI CENTRAL): Hon. Deputy-Speaker, Sir, I would like to bring to the notice of the august House an important matter. An independent expert Committee should be formed to investigate the administration
of educational loan interest subsidy. In response to my submission in the Lok Sabha on 30th July, 2014 under Rule 377, the hon. Finance Minister has written that the banks have been advised not to insist on payment of interest when the students are eligible for interest subsidy on educational loan. He has also mentioned that the banks have been asked to follow the guidelines. But in reality
we get a lot of complaints that the banks are forcing students to pay interest when they are eligible for interest subsidy. The poor students are forced to borrow money from all sources to repay the bank interest. The banks are creating only a small portion as eligible interest subsidy to the students. This defeats the very
purpose of the scheme to provide educational loan to poor students with comparable repayment. We get reports that the SBI classifies the educational loans as NPA even within four to five months after the moratorium and refer to Lok Adalat. This is causing mental agony to young students. There seems to be a lot of mess in administering interest subsidy on educational loans. I would like to
request the hon. Finance Minister to investigate the matter by forming a committee of independent expert 

Monday, December 15, 2014

Finance Minister's response on 'Interest subsidy' - ELTF demands constitution of an independent investigation committee

As requested by ELTF, Chennai Central MP Shri S R Vijayakumar took up the issue of poor management of 'interest subsidy scheme' by the banks in the Lok Sabha under Rule No 377 on 30th July 2014.  link.  In response to the submission in Lok Sabha, Hon'ble Finance Minister Shri Arun Jaitley has sent his personal response to Shri S R Vijayakumar MP on 1st Dec 2014.  In this letter, Finance Minister mentions the following important points.

1.  All Banks have been asked to display in their branch premises prominently, a toll free number for giving complaints.

2.  All Banks have been advised to follow the instructions given by the Government/RBI and IBA for considering and granting of education loans.

3.  All banks have been advised not to insist the student borrowers to pay interest during the moratorium period, if they are eligible for interest subsidy.

4.  Interest subsidy scheme has been duly publicised through print and TV media widely.

5.  If there is a delay in reimbursement of subsidy, the students are given retrospectively by the banks. 

Probably, ELTF feels that Hon'ble Finance Minister might have just reproduced the comment given by IBA or any other authorities, as if the entire system is working well.  In reality, the banks are not displaying any toll free number prominently to enable the public to communicate the grievances.  Banks do not follow the guidelines issued by IBA in respect of Education Loans.  Many of the Private Banks have scant respect for IBA guidelines.

Though, the banks have been instructed not to insist on the payment of interest, if they are eligible for interest subsidy, during moratorium period. In reality, all the banks force the banks to pay interest during the moratorium period. Instead of calculating at simple rate, all the banks calculate interest on compounded basis. Though the students are eligible for 100% interest subsidy, they are given only a small portion of the subsidy. 

Though the banks are required to communicate the interest subsidy scheme individually to all the student borrowers, they do not inform the students.  No publicity campaign has been done by IBA or by any banks.  Probably IBA has misled the Government with wrong information.

From the feedback received by ELTF, we are of the opinion that the Finance Minister has not been given the right picture of the management of the scheme.  Though the students are promised 100% subsidy during the moratorium period, they are given only a small portion.  

Though one year holiday period is given after the study, many students do not get proper employment.  Banks like State Bank of India after  3 or 4 months of moratorium period, treat the loans as NPA and handover to Lok Adalat and force students to sign documents to pay the entire loan within six months.  While IBA guidelines permit flexible repayment schedule upto 10 to 15 years, the many banks, including State Bank of India, pressurise the students to pay money beyond their capacity, thereby defeating the very purpose of the scheme. This affects their credit rating through CIBIL.

Recently, ELTF came across a case where a Branch in Chennai Zone of Corporation Bank did not submit the claim for interest subsidy, within the due date, since the officer was on leave.  The insensitivity of the Branch Manager and the Zonal Manager has denied interest subsidy to an eligible borrower. This has also been brought to the knowledge of Finance Minister. 

ELTF is once again taking up the matter with Hon'ble Finance Minister through Shri S R Vijayakumar.

ELTF appeals to the Government to constitute a committee of independent experts to look into the management of education loan and interest subsidy scheme. 

Friday, November 14, 2014

One more opportunity for SC/ST students to claim interest subsidy before 31st Dec 2014

Indian Banks Association has now issued a circular advising all the banks to submit any left out interest subsidy claims relating to eligible SC/ST students who have availed education loan from the banks.  Since the funds allotted to SC/ST students are not fully utilised, they are now advising all the banks to submit the claims from 1.4.2009 onwards till the financial year 2013-14.  This is not applicable for 'General category' students. 

The claims have to be submitted by the respective banks before 31st December 2014 to nodal bank Canara Bank.  If there are any eligible SC/ST students who have not claimed interest subsidy in the previous years may now avail this opportunity.  ELTF requests such eligible students to meet their Branch Manager with a copy of this IBA guideline and complete the formalities.

If the Branch Managers refuse to cooperate or show ignorance of this notification, the eligible students may meet the concerned Regional Manager and submit a written complaint to him.  They can also submit a written complaint to the Chairman of the Bank.  The last date for submission of claim by the banks is 31st December 2014.  

Monday, August 4, 2014

Chennai-Central MP takes the interest subsidy issue in Lok Sabha

On the request of ELTF, Mr S R Vijayakumar MP (Chennai-Central) took up the issue in Lok Sabha on 30th July 2014 under Rules No 377.  The text of his speech as published by Lok Sabha Secretariat is attached.

As you know, ELTF has been taking up this issue for a long time, even during the 15th Lok Sabha.  The serious concern is that all the eligible students do not get the full interest subsidy from the Government of India.  Though the Government claims to give 100% interest subsidy during the moratorium period, not even a single student gets the subsidy as per the rules.  

This happens due to the insensitivity of the banks and the Government.  Ultimately, the students are asked to pay the interest, though, it is to be got reimbursed from the Government.  Instead of disbursing interest subsidy, ELTF has been demandiang 'interest free education loan' till the end of moratorium period.  Then the responsibility will lie on the banks to collect the interest from the banks.

ELTF thanks Shri S R Vijayakumar, Hon'ble Member of Parliament for taking up the issue in Lok Sabha.

Saturday, July 19, 2014

Interest subsidy scheme for minority students (Padho Pardesh Scheme) for overseas studies

Government of India, Ministry of Minority Affairs has now introduced a new scheme for providing 'interest subsidy' for minority students for overseas studies.  This scheme comes into force from 2013-14.  The loan for overseas studies for specific courses should have been sanctioned by the bank under IBA model scheme.  The annual income of the parents should be less than 6 lakhs.  

If the student is eligible, the Government of India provides full interest subsidy during the moratorium period. (course period plus one year or six months after getting employment, whichever is earlier).

Canara Bank is the nodal bank for managing the interest subsidy.  The banks can file their interest subsidy claims from 1st July 2014.  

This interest subsidy is applicable only for minority students.  Eligible students may contact the concerned Branch Manager for completing the formalities.

Full details of the scheme may be downloaded from the link.

Thursday, July 10, 2014

Madras High Court rules: Banks can't insist on minimum 60% marks to extend educational loans

Please read the media reports dated 9th July 2014

HC orders grant of loan to management quota student

Madras High Court today upheld order of a single judge directing Indian Overseas Bank to grant educational loan to an engineering student, whose plea for the assistance was rejected on the ground he secured a seat under management quota with less than 60 per cent marks. 

Dismissing an appeal by IOB's Tiruppur Branch challenging the single judge's June 20, 2013 order, a division bench comprising Justice N Paul Vasanthakumar and Justice M Sathyanarayanan directed the bank to grant the loan to the son of one A Ravi within two weeks from the receipt of the order. 

The bench said the issue of eligibility has already been settled by the announcement of the Union Finance Minister that students admitted in the management quota were also entitled to get the education loan and all the banks were directed to adopt the said Policy. 

On the basis of the announcement, a review meeting of all the Chief Executives of the PSU banks was held on September 27, 2012 which resolved that the Managing Committee considered the recommendations made by the Indian Banks Association Committee on Educational Loan Scheme and after detailed discussions decided to finance the meritorious students, who pursue courses under Management quota, the court said. 

"In the guidelines framed in the Review Meeting, nowhere it is stated that educational loan can be sanctioned only for those who have secured 60 per cent and more marks," it said.

Banks can't insist on minimum 60% marks to extend educational loans: Madras high court

CHENNAI: Banks cannot fix 60% of marks as minimum required percentage for extending education loan to students, Madras high court has ruled.

A division bench of Justice N Paul Vasanthakumar and Justice M Sathyanarayanan, coming to the aid of an engineering student who got admission under management quota, said on Wednesday that it was incorrect on the part of the bank to deny loan to him on the ground that he has scored only 59% of marks and not the minimum required percentage of 60%.

After being denied an education loan by the Indian Overseas Bank, A Ravi moved the high court for a direction. In June last year, a single judge directed the bank to extend loan to the boy, saying banks cannot deny loans on the ground of minimum marks percentage, that too after he is given admission under management quota.

The bank filed the present appeal saying candidates who have secured 60% marks and above alone are eligible to get education loan as they alone can be treated as meritorious candidates.

Rejecting the submissions, the bench said, "The Government of India launched the scheme of providing educational loans to the economically disadvantaged people, through nationalised banks. Sanction of educational loan is not free, but it is repayable with interest at a later point of time, of course, at reduced rate of interest. The whole idea behind the scheme is to finance the economically disadvantaged people. It is a social commitment for the upliftment of weaker, vulnerable and other sections of the society. It is a social welfare measure. In a way, it is some sort of social banking."

The judges said public sector banks and other financial institutions should bear the government's policy in mind while sanctioning educational loans covering the genuine, reasonable and justified educational expenses and relieve the students and their parents from pressing financial crisis.

In this regard, the judges also pointed out that a review meeting of top bankers decided on September 27, 2013, that they would extend loans to meritorious students who get admission under management quota. It is also stated in the decision that loan applications have to be disposed of within a period of 15 days to one month.

Saturday, May 31, 2014

Android App to get complete details on Education Loan - Download link

free download of android app on education loan guidelines

Education Loan Task Force has now developed an Android app to provide complete details on Education Loan procedures, Guidelines, Interest Subsidy, Complaint procedures, etc.

Interested may download free from the following link and install in their Android mobile and other android devices.

The App was developed by Natarajan Raman (Co-Convenor of Education Loan Task Force and Co-Founder of Action 2020 and India Vision Group).

Please download from the link

Please also share the link with other interested students.  Please send your review and suggestions for improvement of this app to our mail id

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